Study Finds Shoppers Reward Retailers That Have Transparent Pricing

SAN FRANCISCO (KPIX 5) — Ever wonder how much it costs to make your favorite shirt?

Or how much your favorite retailer is making off you?

Some retailers are cashing in on transparency. Studies show the more details the company is willing to disclose; the more likely shoppers are to buy.

Rose Temple chose her shoes based on more than just a picture and a price

Temple shops at Everlane and said, “When you click on the item you want to buy, it shows you exactly where it was made and exactly how much it cost to make it.”

Everlane is one of a growing number of retailers with transparent pricing, giving customers a breakdown of their expenses, including labor, transportation, and materials.

The company says this dress cost them $55. The price for the customer, a $65 mark up.

Michael Preysman founded Everlane in 2012 — hoping that full disclosure about his costs — would appeal to customers.

“They can see how much we paid for every aspect of this shirt,” Preysman said. “The problem in apparel and many industries is you have no concept of what value is. So you could buy a $10 T-shirt or a $100 T-shirt and you don’t really know why.”

Pricing transparency is a growing trend.

Handbag maker Oliver Cabell and European retailer Honest-By both reveal their costs too.

And according to a Harvard Business School study, cost transparency can be good for the bottom line.

Researchers found that consumers are attracted to companies that voluntarily disclose their costs and that honesty ultimately makes shoppers more willing to buy.

But Fashion Institute of Technology Professor Lori Massaro warns, transparency is really just a marketing tool that may give people the false impression they’re getting a better deal.

“I don’t like to use the word gimmick, but it’s an awesome business plan with a really savvy marketing tool. They make it very easy for the consumer to understand,” Massaro said.

As for Rose, she thinks she is getting a good value, but it’s the good quality that keeps her coming back.

Now researchers say not all price transparency is equal. Shoppers seem to appreciate the cost of raw materials, like cotton, but weren’t as sympathetic to paying more based other expenses, like the cost of transportation.